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East coast strike impacts ports that handle vehicle and auto parts trade

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Announcements | International
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A contract between the International Longshoreman’s Association (ILA) and United States Maritime Alliance (USMX) expired Monday without an agreement, sending thousands of dock workers from Texas to Maine on strike. 

The New York Times reports the ports impacted handle about half of all goods shipped to the United States in containers. The strike includes the Port of New York and New Jersey, the third busiest in the country. It also impacts the Port of Baltimore a major hub for the import and export of vehicles. 

European automakers are the most likely to see immediate impact from the strike, according to Reuters. A longer strike could be “debilitating” for the entire sector, it says. 

The Alliance for Automotive Innovation (Auto Innovators) has asked the White House to “broker a resolution.” Reuters says. 

“A protracted strike will be debilitating to the auto supply chain and set off economic and national security ripples across the country – harming auto communities and consumers,” said John Bozzella, Auto Innovators CEO  in the article. 

He told Reuters that the ports handle 34% of all U.S. motor vehicle and parts trade. This was worth $135.7 billion last year. 

The New York Times says the Biden Administration has already said it won’t be invoking a 1947 Taft-Hartley Act, which gives the president the authority to order striking dock workers back to work. 

President George W. Bush invoked the Taft-Hartley Act in 2002 after a 11-day shutdown of 29 West Coast ports, according to the New York Times. It says President Richard Nixon also invoked the act in 1971. 

PBS reports Biden said he would not invoke the act when asked by reporters on Sunday ahead of the potential strike. 

“Because it’s collective bargaining, I don’t believe in Taft-Hartley,” PBS reports he said. 

White House Press Secretary Karine Jean-Pierre also told reporters Monday that the administration has never broke a strike and was not considering doing so now. 

“She added that top officials were still urging both parties to return to the bargaining table and negotiate in good faith,” according to PBS. 

Steve Hughes, CEO of HCS International, also told Reuters that if the strike lasted weeks, it could be a “tragedy.” 

He told Reuters that most automakers could survive some time without vehicle deliveries, but a shortage of parts will hurt. 

“If you look at a GM car, you’re going to find all sorts of European and Asian parts in those cars now,” Hughes told Reuters. 

Dan Levy, a Barclays analyst, told Reuters that 70% of auto parts imports into the country at the affected ports. 

He said automakers have been building inventory ahead of the strike, the article says.

“The European (automakers) lean heavily on Baltimore for imports and Southeastern ports (i.e. Charleston) for exports, as most of their U.S. production exposure is in this region,” Levy said in the article. 

Levy said Detroit automakers could “benefit modestly” from possible reduced inventory limiting pricing pressure. 

Both Ford and GM told Reuters they are monitoring the situation. 

Asian automakers may be less affected, Levy told Reuters. 

The New York Times reports about 45,000 longshoremen are covered under the contract. Negotiations for the six-month contract has been stalled since June. 

“A key sticking point is wages,” the New York Times reports. “East and Gulf Coast longshoremen with six or more years’ experience currently earn $39 an hour, up 11 percent from the start of their previous six-year contract. But over that the same period, inflation has risen 24 percent. A person familiar with the negotiations said the union was asking for a $5-an-hour raise in each year of the new six-year contract, while employers were offering annual raises of $2.50 an hour.”

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Photo courtesy of Janine Lamontagne/iStock

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